Duluth/Gwinnett CPA: Advising Atlanta Taxpayers on Determining Your Personal Income
“Understanding how your Adjusted Gross Income (AGI) is determined and what yours is will be essential to managing your family’s income and spending levels for without a keen grasp, there is both nothing to manage and to benchmark your cash outlays against.” — Atlanta CPA, John Dillard CPA
The below is a sample inquiry we might receive from a client:
I received a letter from the IRS regarding our 2011 personal income tax return. I have not yet examined the return I submitted, but thought I should pass the notice to along to you ASAP. From what I can discern, the IRS is indicating that we didn’t report earnings from our accounts with our brokerage house. Your review and thoughts would be appreciated. Thanks.
Below is my response:
I printed out and reviewed the IRS notice in detail relative to your filed return and attached documentation.
Per the attached notes in my file the brokerage house statement forwarded was an retirement account for which financials transactions within the account would not be taxable. Please review/advise.
If your brokerage house account is an after tax account (not in an retirement account) then the monies will be taxable but we will be able to offset by stock the amount you paid for each stock, which might well produce losses on the sales of some stocks.
If you conclude your brokerage house is an after tax account please forward for each stock sold the original purchase price and purchase date and I will prepare an amended return accordingly.
I anticipate after we do the above the amount assessed by the IRS will wind up being substantially higher than the final amount due.
The calculation of taxpayer’s gross income is essentially a total of all of the taxable income received during the tax year–typically the twelve months ending December 31st. To learn more about determining your Adjusted Gross Income for your personal income tax return see http://www.hiscpa.com/agi.html
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